Auto Insurance Vs Old Auto Lawsuit: Who Wins?

It is possible to switch auto insurance providers after an accident, and you can do so at any time if you are unhappy with your current policy. However, it is important to be aware of the potential consequences. Your rates will likely increase, and you may have to pay a cancellation fee to your previous insurer. Additionally, you will still need to work with your previous insurance provider to settle any open claims related to the accident. It is also crucial to disclose any claims to your new insurer to avoid future complications. While switching auto insurance providers is an option, it may not be the best course of action, especially if you are in the middle of a lawsuit.

Switching insurance companies

Switching auto insurance companies is a straightforward process, but there are a few key considerations to keep in mind to ensure a smooth transition. Here are the steps and some detailed information on switching auto insurance companies:

Step 1: Compare Policies and Insurers

Before switching, take the time to compare different insurance companies and their policies. While you may be tempted by a cheaper rate, it is crucial to ensure that the new policy offers comparable coverage, limits, and deductibles to your existing policy. Affordability is important, but it should not be the sole criterion.

Research how your prospective insurer handles claims. If they are not available 24/7 or have a poor track record of handling claims, the price difference may not be worth the potential headaches. Getting quotes from at least three different insurers is recommended to make an informed decision.

Step 2: Avoid a Gap in Coverage

Ensuring continuous coverage is critical. Even a single day of a coverage gap can have negative consequences. If you are involved in an accident during a coverage gap, you will be responsible for all costs out of pocket, and your new insurer may consider you a high-risk driver, leading to higher premiums.

Plan to have your new policy in effect before cancelling your current one. Most insurers will allow you to choose the start date of your new policy, so you can time it to match the end date of your old policy. Some insurers may even offer a discount for continuous coverage.

Step 3: Cancel Your Old Policy

When you are ready to make the switch, it is typically your responsibility to cancel your coverage with your previous insurer. Contact your old insurance company and provide them with the cancellation date. They may require a specific process for discontinuing your policy, so be sure to follow their instructions.

Step 4: Notify Your Car Lender

If you have a loan or lease on your vehicle, inform your new insurer to provide proof of insurance to your lender. Cancelling your old policy will trigger a notice to your lender about the lapse in coverage, which could result in repossession if not promptly addressed.

Step 5: Be Mindful of Timing

While you can switch insurance companies at any time, certain timing considerations may impact your decision. For example, if you have a pending at-fault claim, switching insurance companies may result in a higher premium once the claim is settled. It is advisable to inform your new insurer about any open claims to avoid surprises at renewal time.

Additionally, switching insurance companies frequently may lead insurers to view you as a higher risk customer who is less likely to stick around. As a result, they may be less generous with discounts. Therefore, ensure that you have a valid reason for changing insurers and that you intend to stay with the new company for a reasonable period.

Step 6: Understand the Impact on Your Credit Score

Generally, switching auto insurance companies will not affect your credit score. However, if you have an outstanding debt with your previous insurer, moving to another company could negatively impact your score. Additionally, some insurers may check your credit history with your consent before offering a quote, as a good credit score is often seen as an indicator of a lower-risk driver.

Step 7: Review Your Coverage Options

When switching insurance companies, it is a good opportunity to reassess your coverage needs. While your state likely has minimum car insurance requirements, consider purchasing higher-than-minimum levels of coverage to ensure adequate protection.

Also, evaluate the type of insurance you need. Minimum requirements often only include liability coverage, which pays for damages to others in an at-fault accident. If you have a newer car or one with a loan or lease, consider adding collision and comprehensive insurance to cover repairs to your vehicle.

On the other hand, if you drive an older car with a low cash replacement value, you may opt to forego full coverage to save on premiums.

Step 8: Check for Potential Penalties

Before switching, review your current policy for any penalties associated with early cancellation. If you switch at the end of your policy term, there are unlikely to be penalties, but some carriers may charge a fee for mid-policy cancellation. Waiting until the end of your policy term to switch may save you some money.

Step 9: Research the New Company

Price is an important factor when choosing an insurer, but it should not be the only consideration. Review other metrics such as customer service scores, financial strength ratings, and available coverage options and discounts. Resources like Bankrate insurance company reviews, the National Association of Insurance Commissioners (NAIC) scores, J.D. Power rankings, and AM Best financial strength ratings can help you make an informed decision.

Step 10: Access Your New Insurance ID Cards

Once you have cancelled your old policy and started your new one, remember to update your insurance ID card. Keep the physical or digital copy of your new ID card in your vehicle or wallet. This proof of coverage will be essential if you are stopped by law enforcement or are involved in an accident.

In conclusion, switching auto insurance companies can be a straightforward process if you follow these steps and considerations. By taking the time to compare policies, avoid coverage gaps, and research your new insurer, you can ensure a smooth transition and make an informed decision about your auto insurance needs.

Reasons for suing your insurance company

Suing your insurance company is a big step and one that should be carefully considered. It is important to understand the reasons why someone might want to sue their insurance company and the potential consequences of doing so. Here are some common reasons for suing an insurance company:

Unreasonable delays in claim processing

If an insurance company takes an unreasonable amount of time to process and pay out on a claim, this can be grounds for legal action. State laws often provide specific time frames for resolving claims, and if these are not met, a lawsuit may be an option.

Inadequate payout amounts

If the insurance company offers a payout that is less than the agreed-upon amount or is inadequate given the circumstances, then legal action can be taken. This may also extend to situations where the insurance company fails to pay valid claims altogether.

Wrongful claim denial

If a claim is denied outright, even though the policyholder submitted their paperwork properly and had adequate coverage in place, this can be a reason to sue. This situation often arises when there is a lack of clarity or ambiguity in the policy, which should be interpreted in favour of the policyholder, not the insurer.

Prolonged investigation of a claim

When an insurance company drags out its investigation of a claim, this can be frustrating and may be considered unreasonable. If the insurance company is not acting in good faith and is unreasonably delaying the process, legal action could be an option.

Lack of justification for claim denial

Insurance companies are generally required to provide a valid reason for denying a claim. If they fail to do so, or if their explanation is confusing and full of jargon, this could indicate bad faith and may be grounds for a lawsuit.

Misrepresentation and fraud

In some cases, insurance companies may engage in misrepresentation or fraud. This could involve misleading advertising, misrepresenting car values or policy provisions, or using fraudulent documents. If a policyholder has been misled or treated unfairly due to the insurance company's fraudulent behaviour, they may have grounds for a lawsuit.

It is important to remember that suing an insurance company should be a last resort, after all other options have been exhausted. The process can be costly, adversarial, and time-consuming, often taking several years to resolve. Policyholders should carefully consider their options and seek legal advice before initiating a lawsuit.

Statute of limitations

A statute of limitations is a law that sets a time limit on when a party can bring a lawsuit forward. These statutes vary depending on the type of case and the state in which the lawsuit is filed. In the context of auto insurance and potential legal disputes, understanding the statute of limitations is crucial for both policyholders and insurance companies.

When it comes to auto insurance-related lawsuits, the statute of limitations can apply to a variety of scenarios. For example, if an individual is involved in a car accident and wants to file a personal injury lawsuit against the at-fault driver, there is a limited amount of time to do so. Similarly, if there is a dispute over insurance coverage or the handling of a claim, the statute of limitations dictates the timeframe within which legal action can be initiated.

The specific time limits for filing a lawsuit related to auto insurance vary depending on the state and the nature of the claim. For example, in many states, the statute of limitations for personal injury claims arising from car accidents is typically two years from the date of the accident. On the other hand, disputes over insurance contracts may have a longer statute of limitations, often ranging from three to six years, depending on state law.

It is important to note that the statute of limitations is not a hard-and-fast rule, and there may be exceptions or special circumstances that can extend or toll (temporarily stop) the deadline. For example, if the plaintiff (the party filing the lawsuit) is a minor or if the defendant (the party being sued) leaves the state, the time limits may be extended. Additionally, the discovery rule may apply in certain cases, which means the statute of limitations begins not from the date of the incident but from the date the injury or dispute was discovered or should have been reasonably discovered.

Bad faith insurance

In the context of auto insurance, bad faith insurance practices can include the following:

• Unreasonably refusing to settle a case, thereby exposing their insured to an excess verdict.
• Denying or stopping the payment of a crash victim's claim for benefits.
• Failing to pay "underinsured motorist" coverage benefits "on a timely basis".
• Failing to keep the insured fully informed of all developments in the claim or suit.
• Not soliciting a settlement offer or initiating settlement negotiations when warranted.
• Making low-ball settlement offers that are substantially less than the amounts due to the victim.

In the state of Michigan, an auto accident victim can file a bad faith insurance lawsuit against their auto insurance company or the at-fault driver's insurance company if they have acted in bad faith. This allows the victim to recover money from the insurance company. Similarly, in New Jersey, insureds can sue their insurance company for bad faith conduct, and motorists can sue for bad faith conduct by auto insurance companies under the New Jersey Insurance Fair Conduct Act (IFCA).

If a policyholder suspects that their insurance company is acting in bad faith, they should confront the company or consult a lawyer. Policyholders can also file a complaint with the relevant state authority, such as the Ombudsman's Office in the Department of Insurance and Banking in New Jersey.

Appealing a rejected insurance claim

If your auto insurance claim has been rejected, there are several steps you can take to appeal the decision. Firstly, it is important to understand why your claim was denied. Review the denial letter from your insurance company and identify the reason for the rejection. Common reasons for claim denials include errors or missing information in the claim documents, lack of relevant coverage, or fraud.

Once you understand the reason for the denial, call your insurance provider to discuss the decision and review your appeal options. Each insurance company has its own specific appeals process, so be sure to carefully follow all the required steps. Ask your insurance agent to guide you through the process and provide you with the necessary forms and deadlines for submitting an appeal.

To strengthen your appeal, collect and organise all the relevant paperwork related to your claim, including the denial letter, original bills, and documents related to the service, as well as notes and dates from phone calls with your insurance company or any other relevant parties.

The next step is to submit an internal appeal to your insurance company, requesting them to reconsider their decision. Prepare an appeal letter that clearly and concisely states the service that was denied, the reasons for the denial, and why you believe your claim should be paid, supported by relevant evidence from your policy documents. If applicable, include an overview of your health condition and details about why the service is medically necessary, along with supporting medical records or a letter from your doctor.

By law, your insurance provider is required to respond to your appeal within a specified timeframe. If your internal appeal is rejected, you have the right to request an external review by an independent third party. This involves someone who is not affiliated with your insurance company conducting a full review of your case and providing a final answer. Information about your external review options and contact details for the external reviewer can typically be found in your Explanation of Benefits (EOB).

It is important to carefully follow the appeal process and provide compelling evidence to support your claim. Remember that you have the right to seek legal advice and explore alternative options if you feel that your insurance company is not handling your claim appropriately.

Frequently asked questions